Assume $1,000 is deposited in a checkable account by mr. y in bank a. assume further that the reserve requirement is 0.20. the total amount of money which can be created through the entire banking system is $__________ .

QUESTION POSTED AT 18/04/2020 - 06:15 PM

Answered by admin AT 18/04/2020 - 06:15 PM

Hi there

1,000÷0.20
=5,000

5,000−1,000
=4,000....Answer (this is the total amount of money can be created)

Hope it helps
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